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The biggest takeaway when considering a recast mortgage is that it will not lower your mortgage rate or shorten the remaining loan term. If you are looking to pay off your mortgage faster, you can still make bigger payments to pay down the principal after the recast.

In a Nutshell As a general rule, making extra payments just toward the principal balance can help you pay off a loan faster and reduce the overall cost of the loan. But you'll want to make sure your lender accepts principal-only payments and won't penalize you for making them or paying off your loan early.

Recasting can lower the amount of interest the borrower will pay over the life of the loan if a sufficiently large principal payment is made, reducing both the interest and principal remaining on the loan's new monthly payments.

The greatest benefits to recasting a mortgage are lowering the monthly payments and reducing the interest you'll pay over the life of the loan. ... Additionally, the annual percentage rate (APR) will stay the same, which is a benefit if you already have a low interest rate.

Not every lender offers recasting. Contact your lender and ask if it's even an option. You must meet minimum principal reduction standards. Most lenders require a minimum amount of money before qualifying for a recast (usually $5,000), though it can also be a percentage of your principal.

If you have money saved up or receive a cash gift or inheritance, recasting your mortgage is an excellent way to invest in your home equity while keeping more of your income each month. Want lower monthly payments. By recasting your mortgage, you'll reduce your loan principal and reduce your monthly payment amount.

When you recast your mortgage, you pay your lender a large sum toward your principal, and your loan is then reamortized in other words, recalculated based on your new, lower balance. Your interest rate and term stay the same, but because your principal has decreased, your monthly payments will be lower.

Tied-up equity: If you apply a lump sum of cash to the principal on your home, you will not have access to that cash in the future. You may want to evaluate how much you need to have on hand before choosing to recast. Fees: There is often a fee of about $250 to recast your mortgage.

The biggest takeaway when considering a recast mortgage is that it will not lower your mortgage rate or shorten the remaining loan term. If you are looking to pay off your mortgage faster, you can still make bigger payments to pay down the principal after the recast.

Considerations. There are other small advantages to prepaying monthly instead of yearly. With each regularly scheduled payment on a fixed rate loan, you pay a little more principal and a little less interest than on the previous payment. So the sooner you prepay, the further ahead on the payment schedule you will jump.

You can save on interest and lower your payment. A recast can be the perfect solution if you have a large amount of money to put toward your loan, but you aren't sure how your income will change in the future. Recasting allows you to save on interest without taking on a higher monthly payment.

transitive verb. : to cast again recast a gun recast a play also : remodel, refashion recasts his political image to fit the times.